Property management companies support residential landlords with their rental properties, offering various services that can vary widely. Key responsibilities typically include property marketing, tenant acquisition, tenant administration, rent collection, and legal compliance.
Contrary to common misconceptions, property management isn’t an all-or-nothing decision. Landlords must either entirely hand over control or manage everything themselves. Property management services are highly flexible, with different levels of involvement, fee structures, and service options available.
In this article, we’ll explore everything you need to know about property management companies and managing residential rentals. We’ll discover what property management is, the typical services offered, cost expectations, and how to decide if property management is the right choice for you.
What is Property Management?
Property management refers to overseeing real estate and physical property. In the private rental sector, a property manager is an individual or organisation that manages a property on behalf of the landlord.
The primary goal of property management companies is to make a landlord’s life easier by handling necessary administration and ensuring legal compliance. The extent of the property manager’s control and responsibilities varies depending on the landlord’s needs and the services provided by the company.
What Does Property Management Include?
Most property management companies assist with initial tenancy setup and legal requirements. Typical services include property advertising, holding deposits, tenant referencing, tenancy agreement drafting, deposit registration, and rent collection.
Additional services, available in more comprehensive plans or as add-ons, include conducting viewings, arranging legal certificates and property inspections, rent protection or insurance, legal expenses cover and eviction support, home emergency or property maintenance, property administration, accounting, and taxes.
Types of Property Management
There are different forms of property management with varying payment structures and benefits.
Many high-street property management companies charge a percentage of the monthly rent. Rates vary based on the level of service, with “tenant-find” services starting around 6% and “fully-managed” services between 10-15%. Be sure to clarify if VAT is included in the quoted percentage.
Some companies offer fixed-fee arrangements, meaning a set monthly fee regardless of the rent amount, which can be cost-effective for landlords with higher rents, especially in regions like London.
Another option is rent-to-rent management, where the management company pays the landlord a fixed rent and sublets the property for a higher amount, keeping the difference as their fee. This option suits landlords who prefer to avoid involvement with their property but may result in lower income than market rent.
Do You Need Property Management?
Property management is a personal decision based on the problems you need to solve, your budget, and what you want from a property manager.
Some landlords prefer to hand over the keys and receive their rent without involvement, while others seek support with legal and administrative tasks. Ultimately, it’s about finding the right balance of support that suits your needs.
5 Things to Consider When Comparing Property Management Companies
First, determine your budget and compare the costs and benefits of doing tasks versus hiring a professional. List essential services and get quotes from at least five companies.
Use tools like the Letting Fees Savings Calculator to compare costs.
Next, consider how much time you can dedicate to managing your property. If managing the property takes too much time, a higher level of service might be beneficial.
Identify which aspects of rental management are challenging for you. Compare different companies’ services and decide if you need everything they provide.
Reflect on how much control you want over your property and tenancy. A full management service might not be suitable if you want to be involved in critical decisions.
Lastly, it would help if you researched customer reviews on platforms like Google and Review Centre to gauge the experiences of other landlords and tenants with the company.
Benefits and Drawbacks of Property Management Companies
Property management companies offer several advantages, such as ensuring legal compliance and relieving landlords of administrative burdens, which can be a significant stress reliever.
However, costs can be a deterrent, with percentage rates potentially being expensive and rent-to-rent arrangements resulting in lower income. The perceived value of these services depends on the landlord’s rental income and budget.
Is Property Management Right for You?
Evaluating your experience and current needs can help determine suitable property management. If you’re already using a service, it might be worth comparing it to others to see if you can save money or get better value elsewhere.
Reader Questions and Detailed Answers
What specific services do property management companies offer, and how do they vary between different companies?
Property management companies offer comprehensive services designed to make a landlord’s life easier. These services typically include property advertising, tenant screening, lease agreement preparation, rent collection, maintenance and repairs, and legal compliance.
Companies may offer additional services such as eviction support, financial reporting, and property inspections. Some companies provide customisable packages that allow landlords to select only the services they need, offering flexibility in terms of cost and involvement.
How much does property management cost, and what factors influence these costs?
Property management costs vary based on several factors, including the level of service, the type of property, and the location. The primary cost structures are the percentage of rent and fixed fees.
Many property management companies charge a percentage of the monthly rent. This typically ranges from 6% to 15%, depending on the level of service provided. Some companies offer a fixed monthly fee regardless of the rent amount, which can be cost-effective for properties with higher rents.
Additional fees for extra services such as eviction handling, maintenance, and legal compliance checks may apply. Factors influencing costs include:
- The complexity of managing the property.
- The number of units.
- The specific needs of the landlord.
Landlords should compare quotes from multiple companies and clarify whether VAT is included in the quoted rates.
How do I choose the right property management company for my needs?
Selecting the right property management company involves considering several key factors.
First, ensure the company offers the services you need. Compare different companies’ service packages and customise them to fit your requirements.
Evaluate your budget and compare the pricing structures of various companies, considering both the monthly fees and any additional costs for extra services.
Research reviews and testimonials from other landlords to gauge the company’s reliability and customer satisfaction. Check platforms like Google and TrustPilot for unbiased feedback.
Decide how much control you want to retain over your property. Some landlords prefer to be hands-off, while others want to be involved in key decisions. Finally, choose a company with a proven track record and expertise in managing properties like yours.
What are the benefits and potential drawbacks of using a property management company?
There are several benefits to using a property management company. Time savings are significant, as property management companies handle day-to-day tasks, freeing up your time. Their expertise ensures legal compliance and effective handling of tenant issues, reducing stress and hassle for landlords.
Management companies can also offer financial security services like rent collection and protection.
However, there are potential drawbacks. Management fees can be significant, especially for properties with lower rental income. Some landlords may be giving up too much control over their property.
Additionally, not all property management companies offer the same level of service, so it is essential to research and choose wisely.
Is property management suitable for all types of landlords and properties?
Property management is suitable for many, but not all, landlords. It is particularly beneficial for portfolio landlords, as managing multiple properties can be time-consuming, and property management companies offer streamlined solutions.
Landlords who live far from their rental property may also benefit from property management services, as these companies can handle local tasks and tenant interactions.
Busy professionals with demanding jobs or other commitments may need help managing properties effectively and could benefit from the support of a property management company.
However, if you have a single property, live nearby, and have the time and knowledge to manage it, you might not need a property management company. Ultimately, the decision depends on your specific circumstances, needs, and budget.
Evaluating your experience and current needs can help determine suitable property management. If you’re already using a service, it might be worth comparing it to others to see if you can save money or get better value elsewhere.
About Lettingaproperty.com
Lettingaproperty.com offers a modern, online alternative to traditional high-street letting agents. We specialise in assisting landlords across the UK by providing a range of cost-effective services, from finding suitable tenants and managing properties to handling rent collection and ensuring compliance with rental regulations. Our letting services are designed to simplify the rental process, making it quicker, easier, and more economical for landlords to manage their properties effectively.
Whether you are a newcomer to property rental or an experienced landlord, our platform utilises the latest technology coupled with personalised support to help you maximise the potential of renting out your property. We pride ourselves on transparency, affordability, and providing a reliable service that landlords can depend on.
For more information or to get started with us, visit lettingaproperty.com or contact our customer support team. We are here to help you navigate the complexities of property management with ease and confidence.
